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This proposal is unique in the sense it offers to generate cultural activity transmitting through the wider Coventry local economy, without asking for (other than starting) funding from the local authority, but instead offering new money which arises from the currency seigniorage and commissions proposed within a new local-authority led digital and complementary currency.
Coventry LETS was formed in 1993 and operated for 22 years ( https://coventry.letsystem.org/ ). An estimated 430 accounts were opened and used through this period, mostly for individuals, some for couples with a few charities and small companies. Accounts started at zero balance, which went up when value of goods or services were credited, and down when payments (or acknowledgements) were made. During the first 10 years of operation PC and paper based accounts, trading sheets and cheques were written and cleared manually. The author then developed the PyLETS web application software for this purpose, later to include account holders offers and wants listings.
The system's remaining 12 years of operation were made possible due to the great reduction in administration work. The membership agreement involved disclosure by an account holder of their trading position and turnover to other account holders. This built trust, but in a manner incompatible with privacy requirements of a much larger system. Trading slowly declined, as the founding and typical joining members grew older, so were less able to travel to trading events. Some trading activities continued between individuals off the books, as unaccounted gift exchange. Coventry LETS helped enable these friendships within smaller circles to be formed. Reducing account holder interest in keeping score resulted the last transaction on Coventry LETS books being recorded in 2015.
A test instance of the web application containing made up data can be explored at https://copsewood.net/py_lets_cgi/index.html using the login details given on that page. It's conceivable local groups forming within the covid-19 emergency for local volunteering purposes might continue operations based on this existing kind of open-source platform. But that's not the motivation for this paper.
Coventry LETS and similar systems in the UK and elsewhere starting in the eighties and nineties demonstrated complementary forms of currency to be feasible, and this can help those able to meet the needs of others within their community to feel valued, in the sense that the accounted credit units can be spent to meet their own similar needs without the receiver of goods and services feeling they are in receipt of charity they don't need and would not want to request in these terms. Gift exchange doesn't need to be direct and can be amongst a larger group, when the participant will feel more secure if a score is kept.
Various token-based banknote systems were started in the same years elsewhere intended for wider scale use, but which are thought now to be little used. Local businesses may have been able to accept a percentage of a price e.g. in Brixton or Totnes Pounds. This operated similarly to a discount coupon from the perspective of the accepting business, indicating a local affiliation and willingness to support local causes, thus raising the profile of these businesses within their communities. But it's not always convenient for the shopper to keep more than one kind of token currency in purses. Had the use of such local currencies expanded, a security infrastructure similar to how conventional cash is handled would have been required. Barriers to the use of complementary currencies exist, in the sense that their operation is not currently consistent with how large organisations such as corporates with branches in a locality, or local authorities make decisions. Physical cash costs more to make and handle than solely digital money. So use tends to have been restricted to small and independent local shops and cafes, and private individuals with occasional charitable use.
The Coventry City of Culture 2021 (CCC21) year, likely to follow economic privations resulting from the covid-19 emergency, is considered to offer an environment in which new initiatives can and must occur for a success to be made of this year. Compared to community currency participants in the 1990ies, fewer Coventry residents will experience problems using smartphones or swipe cards, e.g. as used to pay bus fares, in order to spend local credits. Getting larger organisations involved, particularly including the Coventry City Council (CCC) as the lead issuer and beneficiary, will encourage local businesses and startups to offer goods and services either entirely in exchange for this local currency, or as a percentage of prices offered.
The proposed Coventry Pound (CP) will exist only in digital form. The CP will be spent into existence by CCC, on local arts, community outreach, education and heritage projects which CCC intends supporting as part of CCC21 in any case, but is expected to lack conventional funding in order to do so. Issuance of the CP offers an expanded funding stream. CPs can, in ending the lifecycle of particular currency units, be accepted by the CCC as part or entire payment of council tax, or similar, e.g. business rates, rents, library fines or sports centre memberships. This acceptance of their own issued money will effectively underwrite the currency value, giving local businesses and individuals who accept this as payment or as volunteering expenses, the full confidence that this local money is as acceptable as conventional money. CCC will need to become creative and maintain activity in how it continues to re-spend this new money into existence, in such a way that the currency supply is maintained despite acceptances by CCC removing previously circulating units from the system. Legal obligations to pay employees and contractors using conventional money will restrict issuance by CCC to situations where it wants to fund an activity, as opposed to where it is legally obliged to make payments.
In order to ensure a positive cycle (and also to pay system costs) a transaction commission - suggested at 10% of each transaction paying money into a private or business account, will automatically be taken by the CCC, to be either retired or preferably respent by CCC into circulation - so if an issued CP is spent on average 5 times before being paid back to CCC, the local authority gets a multiple of 1.5 of revenue in relation to cost of acceptance (minus cost of operating the system but with a positive cashflow delay between date of issuance and date of acceptance). A small proportion of this will sustain system operation. The 10% commission is a demonstration of local loyalty by those paying this, and also acts as a network firewall making the CP a more genuinely local currency. An intending user in Rugby or Warwick would want their own local authority, and not someone else's locality and community activities to benefit, encouraging neighbouring local authorites to follow suit.
LETS, as with the Wright brother's powered flight, demonstrated proofs of concepts. The fact both came into land safely and did not continue airborne or trading indefinitely, deducts nothing from what was demonstrated. The Wright's working prototype also required more advanced engineering before air travel became safe and reliable enough for many passengers.
Local authorities becoming issuers and accepters of their own complementary local currencies will result in development of a wider agenda to keep conventional taxes exempt from this new class of personal income, business value added and revenue, on condition that the local authority revenue obtained as described in this paper, offsets the conventional tax exemption adequately. The percentage of local authority commission acceptable may need adjustment to justify such an exemption.
A city-wide local authority probably shouldn't be thought of as a single entity or intent. These comprise much more a network of departments as diverse as recycling collection, museums, sports centres, parks, road maintenance, housing and social care services are from each other. If a library accepts this currency e.g. in payment of overdue return of a book, printing/copying services or special event ticket cost, and has a volunteer group, e.g. a story-telling circle, it can encourage by spending currency received on their expenses immediately, then this money should not return to a common pool. This encourages decentralised decision making concerning recirculation. The money should only return to a central pool if the accepting department is unable responsibly to spend it into circulation in a timely manner. Spending from the central pool seems likely to require higher decision costs. However, a department insufficiently imaginative or otherwise legally or politically encumbered so as to be unable to spend local currency in furtherance of it's own purposes, should not be allowed to sit upon what then becomes a future liability for the local authority seen as a whole. The proportion of local money spending which must revert to being decided centrally can be expected to incur higher decision costs and delays. This factor is likely greatly to reduce the cost in conventional money terms, through accepting local money the CCC has issued in the past in lieu of such payment being in conventional money, by respending this local money straight back into the community, increasing the multiple of revenue obtained in relation to the conventional currency liability accepted by issuing this money into existence.
In getting the proposed CP operational, various challenges exist, including the following.